Some authors identify two main streams in dependency theory: the Latin American Structuralist, typified by the work of Prebisch, Celso Furtado, and Aníbal Pinto at the United Nations Economic Commission for Latin America (ECLAC, or, in Spanish, CEPAL); and the American Marxist, developed by Paul A. Baran, Paul Sweezy, and Andre Gunder Frank.
The Latin American Structuralist and the American Marxist schools had significant differences but, according to economist Matias Vernengo, they agreed on some basic points:[B]oth groups would agree that at the core of the dependency relation between center and periphery lays [lies] the inability of the periphery to develop an autonomous and dynamic process of technological innovation.
Baran and others frequently spoke of the international division of labour – skilled workers in the center; unskilled in the periphery – when discussing key features of dependency.
In the older of the two, plantation agriculture, which originated in colonial times, most of the surplus goes to the landowners, who use it to emulate the consumption patterns of wealthy people in the developed world; much of it thus goes to purchase foreign-produced luxury items –automobiles, clothes, etc.
They cited the partly successful attempts at industrialisation in Latin America around that time (Argentina, Brazil, Mexico) as evidence for this hypothesis.
[14] The third-world debt crisis of the 1980s and continued stagnation in Africa and Latin America in the 1990s caused some doubt as to the feasibility or desirability of "dependent development".
He believes that the hegemonic position of the United States is very strong because of the importance of its financial markets and because it controls the international reserve currency – the US dollar.
"Standard" dependency theory differs from Marxism, in arguing against internationalism and any hope of progress in less developed nations towards industrialization and a liberating revolution.
Theotonio dos Santos described a "new dependency", which focused on both the internal and external relations of less-developed countries of the periphery, derived from a Marxian analysis.
Former Brazilian President Fernando Henrique Cardoso (in office 1995–2002) wrote extensively on dependency theory while in political exile during the 1960s, arguing that it was an approach to studying the economic disparities between the centre and periphery.
Other leading dependency theorists include Herb Addo, Walden Bello, Ruy Mauro Marini, Enzo Faletto, Armando Cordova, Ernest Feder, Pablo González Casanova, Keith Griffin, Kunibert Raffer, Paul Israel Singer, Walter Rodney and Osvaldo Sunkel.
Many of these authors focused their attention on Latin America; dependency theory in the Arab world was primarily refined by the Egyptian economist Samir Amin.
World Systems Theory is also known as WST and aligns closely with the idea of the "rich get richer and the poor get poorer".
Wallerstein believed in a tri-modal rather than a bi-modal system because he viewed the world-systems as more complicated than a simplistic classification as either core or periphery nations.
[17] Tausch[17] traces the beginnings of world-systems theory to the writings of the Austro-Hungarian socialist Karl Polanyi after the First World War, but its present form is usually associated with the work of Wallerstein.
[17] Cyclical fluctuations also have a profound effect on cross-national comparisons of economic growth and societal development in the medium and long run.
What seemed like spectacular long-run growth may in the end turn out to be just a short run cyclical spurt after a long recession.
[22] According to economic historian Robert C. Allen, dependency theory's claims are "debatable" due to fact that the protectionism that was implemented in Latin America as a solution ended up failing.
[23] One of the problems was that the Latin American countries simply had too small national markets to be able to efficiently produce complex industrialized goods, such as automobiles.
This began an economic system in the Americas, Africa, and Asia to then export the natural materials from their land to Europe.
[29] What causes dependency is the inhibition of development and economic/political reform that results from trying to use aid as a long-term solution to poverty-ridden countries.
International development aid became widely popularized post World-War Two due to first-world countries trying to create a more open economy as well as cold war competition.
During the economic crisis in the 1980s and the 1990s, a great deal of Sub-Saharan countries in Africa saw an influx of aid money which in turn resulted in dependency over the next few decades.
In addition, some citizens will deliberately work less, resulting in a lower income, which in turn qualifies them for aid provision.
In the long-run, the agricultural industry in LDC countries grows weaker due to long-term declines in demand as a result from food aid.
[39] For example, Zimbabwe and the Democratic Republic of the Congo both have extremely high aid dependency ratios and have experienced political turmoil.
The politics of the Democratic Republic of the Congo have involved civil war and changing of regimes in the 21st century and have one of the highest aid dependency ratios in Africa.
[41] Target areas to decrease aid dependence include job creation, regional integration, and commercial engagement and trade.
[42] Long-term investment in agriculture and infrastructure are key requirements to end aid dependency as it will allow the country to slowly decrease the amount of food aid received and begin to develop its own agricultural economy and solve the food insecurity Political corruption has been a strong force associated with maintaining dependency and being unable to see economic growth.
During the Obama administration, congress claimed that the anti-corruption criteria The Millennium Challenge Corporation (MCC) used was not strict enough and was one of the obstacles to decreasing aid dependence.